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Research by the Financial Conduct Authority (FCA) into consumer attitudes towards cryptocurrency found that most people did not have “a good understanding of what they are purchasing”, The Daily Telegraph reports.

Some investors who were quizzed by the watchdog talked about buying “whole” coins, without realising that they could buy a fraction of a digital currency, the newspaper says.

Around 3% of all those interviewed had purchased a virtual coin. Men between 20 and 44 were the most aware of cryptocurrencies, bitcoin was the favoured token, and around half of the investors had spent less than £200.

When asked why they had invested, many said they had heard about the opportunity through “friends, acquaintances and social media personalities”, the Daily Mirror reports.

Bitcoin’s surging values in late 2017, when the cryptocurrency peaked at nearly $20,000 (£15,280), has also played a major role in luring amateur investors to the market.

Following its meteoric rise, the cryptocurrency market endured continuous sell-offs over the past 14 months. As of 10am UK time, bitcoin’s value sat at $3,917 (£2,993) per coin, according to CoinMarketCap.

Although the lack of understand among investors has caused concern, the FCA concludes that the “overall scale of harm” may “not have been as high as previously feared”, as the sums being invested are generally quite small, , the BBC reports.

Nevertheless, Laura Suter, a personal finance analyst at investment firm AJ Bell, told the Telegraph that potential bitcoin investors must “know the risk of what you’re buying and that you’re not just relying on hype and excitement from friends or social media.”

“Investing is not a get rich quick scheme, it’s a way to build wealth slowly and with patience,” she warned.